Weidai Ltd. (NYSE: WEI) (“Weidai” or the “Company”) is the largest auto-backed financing solution provider in China in terms of loan volume in each of 2015, 2016 and 2017, with a market share of approximately 35% in 2017, according to the Oliver Wyman Report. The Company’s platform connects borrowers, the majority of which are small and micro enterprise owners, with both online investors and institutional funding partners. Established in 2011 by a group of entrepreneurs with backgrounds in small and micro enterprises, Weidai is dedicated to providing small and micro enterprise owners with accessible credit. Weidai pioneered auto-backed financing in China in the form of title loans. The Company believes its products and services create exceptional value for both borrowers and investors.
Weidai was the first in China to introduce auto-backed financing product in the form of title loan with “collateral registration + GPS system” features in 2011, which has replaced the traditional model of lenders keeping automobiles in custody and has since become the industry standard, according to the Oliver Wyman Report. The Company’s auto-backed loans generally have principal amounts between RMB30,000 and RMB200,000, tenures from one to 36 months and APRs from 20% to 36%.
Weidai has built a nationwide network of 492 service centers across approximately 300 cities over the past seven years, which it believes present significant barriers to entry. This extensive offline network, seamlessly integrated with its centralized technology platform and risk management system, has enabled a fast and highly automated transaction process. The Company’s lending decisions are generally made within 30 minutes of application after information collection and automobile appraisal, and loans are generally disbursed within the same day, including weekends, delivering superior user experience. In addition, through this geographically dispersed network, Weidai has gained a large and increasing volume of transaction data and local know-how. The breadth and depth of these transaction data have enabled the Company to make accurate credit assessments, effectively preventing fraud and enhancing collection efforts.
Weidai believes its auto-backed loan products, which transform used automobiles, a type of “non-standard” collateral, into investable assets, represent a relatively high-quality and low-risk asset class that is hard for investors to access elsewhere. The Company primarily serves online investors who can choose to invest in individual loans using its smart investing tools or a portfolio of loans through its investment programs. The Company also collaborates with institutional funding partners.
Weidai maintains a sophisticated and effective risk management system spanning across the entire transaction process, from borrower acquisition to loan collection. With a team of over 760 dedicated automobile appraisers, the Company adopts a multi-dimensional risk management approach from both “borrower” and “automobile” perspectives, and gains further insights from its proprietary data and a broad spectrum of third-party data sources, resulting in its best-in-class automobile appraisal capabilities. The Company’s advanced GPS tracking system and dedicated post-loan management mobile app serve as powerful tools for detecting fraud and taking automobiles into custody. As a result, the Company has achieved robust credit performance, with the lowest delinquency ratio as of December 31, 2017 among the top five marketplace lending platforms in terms of loan volume in 2017, and none of the other four marketplace lending platforms offers any auto-backed financing, according to the Oliver Wyman Report.